- As markets bet they're close to the conclusion of their tightening cycles and a strong inflation figure in the UK presented a cautionary tale for global central banks fighting inflation, stocks struggled to find direction.
- When the index recorded its first back-to-back losses in nearly four weeks, futures contracts on the S&P 500 fluctuated in a constrained range.
- A decline in UK inflation coincides with Federal Reserve Chair Jerome Powell's semi-annual report to Congress, when he is anticipated to reaffirm his cautions that higher rates may be necessary to combat inflation. At their meeting last week, Fed policymakers decided to leave interest rates steady. However, their predictions call for up to two additional quarter-point rate hikes or one half-point increase.
- Prior to Powell's speech, the dollar rose, while the pound declined after reversing early gains in response to yet another unexpected inflation reading. The day before a policy meeting, traders increased their bets on additional BoE interest rate hikes to a level not seen since the turn of the century.
- Traders fully price 4% peak ECB rate for first time since March.
- Traders fully price 6% BoE peak rate by December after CPI data.
- Traders see 50% chance of a half-point BoE hike Thursday.
